Sweden Trims Vaunted Safety Net
Swedes agree state needs to scale back welfare, but it's hard to walk away from those legendary benefits
AT a recent rally outside Sweden's parliament building, protesters opposing billions of dollars worth of planned cuts in Sweden's public spending held up signs with the word "welfare" under a cross.Skip to next paragraph
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Debate in Sweden is raging over whether the 81 billion krona ($11 billion) in budget cuts proposed April 22 by the conservative government of Prime Minister Carl Bildt will consign the country's cradle-to-grave welfare state to the graveyard.
Much of the cutting, which is part of an effort to reduce a budget deficit that in recent years has ballooned to more than 13 percent of gross national product (GNP), will reduce benefits that Swedes have come to consider a right. Unemployment and sick leave benefits, parental leave and pensions, among the most generous in the world, are all set to fall. Individuals will find medical and dental care and other services becoming more expensive.
Along with its previous welfare reductions, the Bildt government's cuts will amount to more than 10 percent of GNP. The changes may seem drastic to a population that since World War II has learned to rely on a very high safety net. Yet most officials and observers here believe the reductions will simply bring the system in line with more common Western European standards.
The real revolution for Sweden, the observers say, is the change in the public's view of the role of government that stands behind not just the welfare-state reform, but wide-ranging deregulation and privatization initiatives affecting everything from banking and food distribution to health care, postal delivery, and telecommunications.
"Many of the problems we are facing are actually the same ones the Eastern European governments are having to tackle," says Olof Ehrenkrona, director of policy planning in the prime minister's office. "The great difference is that we have a well-functioning private sector, but we have the same need to cut expenditures by reducing the role and size of the state."
Despite the protests of trade unions and public service agencies, the shift in government philosophy, if not the cuts themselves, meets with approval, especially among the young.
"It was the young people who brought the Bildt government to power," says Ingemar Dorfer, an adviser at the Foreign Ministry. "They travel freely to Europe and know very well the US, and they want a country where more value is placed on the individual's initiative."
Even ardent supporters of the high social benefits accept that they were costing too much. "We had to accept that some of the social services were too high, particularly when they became disincentives to labor supply, productivity, and savings in the economy," says Gunnar Wetterberg, assistant under-secretary with the Finance Ministry and a Social Democratic economist. "If we act now, we should be able to get out of our predicament with a little less social protection, but more responsibility for the peo ple themselves."